Question

Under Federal Regulation Q, the individual states were allowed to impose a ceiling on the rates that lenders were allowed to charge on mortgages. The effect of this regulation was:

Question 22 options:

	1) to keep mortgage rates low and affordable
	2) that mortgage money dried up in those states when interest rates rose to cyclical peaks
	3) that fewer lenders were willing to finance residential mortgages in the presence of higher paying investments
	4) an increase in the number of lenders willing to finance residential mortgages because of the risk-free stability of these loans

Answer 1

Ans 2) that mortgage money dried up in those states when interest rates rose to cyclical peaks

Under Federal Regulation Q, the individual states were allowed to impose a ceiling on the rates that lenders were allowed to charge on mortgages. The effect of this regulation was that mortgage money dried up in those states when interest rates rose to cyclical peaks.